Limelight Networks IPO prices above range

The eagerly anticipated IPO of Limelight Networks (LLNW-NASDAQ) priced last night at $15 per share through Goldman and Morgan Stanley.  The deal was upsized to 16 million shares and priced well above the original $10-$12 range.

Goldman’s merchant banking arm injected $130 million in Limelight in July of 2006 and gained several board seats, no doubt anticipating an opportunity to take on a bigger role, and in the process wrest control from founder and then CEO Bill Rinehart, who was barred from serving as an officer or director of a public company for five years by the SEC.  Rinehart was formerly VP of Sales at former Nasdaq high-flyer Critical Path, which used a bit of creative accounting to meet its quarterly numbers. Ironically, Critical Path’s was a pioneer in providing enterprise email services. 

By most accounts Rinehart positioned Limelight for success before turning over the CEO reins to Jerry Lunsford, the former CEO of WebSideStory. And don’t cry for Rinehart, he is selling approximately 500k shares in the IPO and his remaining 3 million share stake in the company should be enough for him to retire comfortably on.

Of course Goldman makes the easy money here, as both investors and underwriters. Almost too easy, considering they have only been on board a year now.

I don’t know if Limelight can put a hurt on rival Akamai, or shrug off the legal issue with Akamai and MIT. But I do know that in America, the rich get richer.

This story should be fun to keep tabs on going forward, given the rapidly growing end markets and competitive landscape.

Limelight Networks is a leading provider of high-performance content delivery network services. We digitally deliver content for traditional and emerging media companies, or content providers, including businesses operating in the television, music, radio, newspaper, magazine, movie, videogame and software industries. Using Limelight’s content delivery network, or CDN, content providers are able to provide their end-users with a high-quality media experience for rich media content, including video, music, games, software and social media.

As consumer demand for media content over the Internet has increased, and as enabling technologies such as broadband access to the Internet have proliferated, consumption of rich media content has become increasingly important to Internet end-users and therefore to the content providers that serve them. eMarketer estimates that at the end of 2006, nearly 60% of all Internet users regularly watched videos online, and approximately 80% are expected to do so by the end of 2010. We developed our services and architected our network specifically to meet the unique demands content providers face in delivering rich media content to large audiences of demanding Internet end-users. Our comprehensive solution delivers content providers a high-quality, highly scalable, highly reliable offering at a low cost. As of May 2007, approximately 800 customers are using Limelight Networks to deliver the high-quality media experiences that their consumers seek online.
-------------------------

Mr. Rinehart is engaged in international business development activities on our behalf, and he does not presently serve as one of our officers or directors. Prior to co-founding Limelight, Mr. Rinehart served in a number of executive-level sales positions at Critical Path, Inc., a provider of Internet messaging products and services, from 1998 to 2000. In 2002, the SEC alleged that during a portion of the time Mr. Rinehart was associated with Critical Path, Mr. Rinehart participated in a fraudulent scheme to inflate Critical Path’s revenue and earnings. Mr. Rinehart and the SEC entered into a settlement under which Mr. Rinehart neither admitted nor denied the allegations and agreed to be fined, was enjoined from future violations of certain U.S. securities laws, and was prohibited from serving as an officer or director of a public company through August 2007.

Limelight Networks S-1

--------------------------------------------------------------------------------------------------------------
The content contained represent the opinions of 1440 Wall Street. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author. No position in LLNW

Comments:

<< Back to main